(Adds details, updates prices)
By Rushil Dutta
May 24 Asian currencies weakened on Wednesday as
an unexpected downgrade of China's debt rating by Moody's hit
sentiment, and dealers awaited the release later in the global
day of minutes from this month's U.S. Federal Reserve policy
Moody's Investors Services downgraded China's long-term
local and foreign currency issuer ratings citing expectations
that the financial strength of the world's second-biggest
economy would dwindle in the coming years.
The move took a toll on Asian stocks as it heightened
concerns over tighter regulation, rising borrowing costs and
signs of an economic slowdown in China.
Asian shares excluding Japan were about 0.3
percent lower, despite gains on Wall Street overnight.
"It’s quite clear that it’s going to be quite negative in
terms of sentiment, particularly at a time when China is
looking to derisk the banking system, as well as at a time when
there’s going to be some potential restructuring of SOEs
(state-owned enterprises)," said Vishnu Varathan, head of
economics and strategy at Mizuho Bank's Treasury.
The Chinese yuan eased 0.04 percent, making its
fourth session of decline in the past five days
However, analysts believe currencies whose economies are
dependent on exports to China could show signs of stress during
"To some extent yen may be affected. Some commodity related
currencies in the region too: the IDR (Indonesian rupiah), for
example; and the (Philippines) peso," said Saktiandi Supaat,
head of FX research at Maybank in Singapore.
The yen and the rupiah were both marginally off.
The Thai baht was 0.1 percent lower ahead of a
central bank policy meeting later in the day where the Bank of
Thailand is expected to stand pat on its benchmark interest rate
of 1.5 percent.
The peso was the biggest loser in the region,
extending losses from the previous session by falling 0.3
percent, its biggest drop in two weeks.
Analysts believe that while Philippines may not have a
massive resources export relationship with China, it certainly
has tightened structural relationships whith China over time.
S.KOREAN CENBANK SEEN HOLDING POLICY
In its first policy meeting since president Moon Jae-in took
office on May 10, the Bank of Korea is expected to keep its base
rate unchanged at 1.25 percent on Thursday, a Reuters poll
Of the 19 economists surveyed, nine expect a rate hike next
year as the bank's next move, while the rest expect no moves for
The central bank's assessment of the economy will be the
focus of attention in the meeting.
The won lost 0.2 percent, and is headed for a
second straight session of decline.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0541 GMT
Currency Latest bid Previous day Pct Move
Japan yen 111.870 111.77 -0.09
Sing dlr 1.391 1.3902 -0.04
Taiwan dlr 30.180 30.166 -0.05
Korean won 1126.600 1124.2 -0.21
Baht 34.460 34.418 -0.12
Peso 49.980 49.82 -0.32
Rupiah 13314.000 13300 -0.11
Rupee 64.915 64.89 -0.05
Ringgit 4.301 4.292 -0.20
Yuan 6.893 6.8890 -0.05
Change so far
Currency Latest bid End 2016 Pct Move
Japan yen 111.870 117.07 +4.65
Sing dlr 1.391 1.4490 +4.19
Taiwan dlr 30.180 32.279 +6.95
Korean won 1126.600 1207.70 +7.20
Baht 34.460 35.80 +3.89
Peso 49.980 49.72 -0.52
Rupiah 13314.000 13470 +1.17
Rupee 64.915 67.92 +4.63
Ringgit 4.301 4.4845 +4.28
Yuan 6.893 6.9467 +0.78
(Reporting by Rushil Dutta in Bengaluru; Editing by Simon